Question 1
The reservation price refers to the maximum amount that Statler hotel wants to spend on this deal. The Statler hotel intends to pay a maximum of $7.40/lb.
With a customer, Anderson Coffee’s reservation price is $5.95/lb. And this price is low because this process is contracted in large quantities with Anderson Coffee, and for this reason, the price is low, but in this deal, the reservation price may be 8% more than this price, and the reservation price will be $6.47/lb.
